Euler Hermes: UK set for bankruptcy spike

Insolvency Service building

Europe and the US will experience a massive spike in business failures next year, with UK firms expected to be among the worst hit.

That is the conclusion of a report from the world’s largest credit insurer, Euler Hermes, which has predicted that record numbers of companies across the globe will go bankrupt in 2009.

The number of firms going bust in the US will rise from 28,000 in 2007 to 42,000 this year and 62,000 in 2009, Euler’s figures – reported in the Financial Times this morning - suggest.

Meanwhile, the number of European insolvencies is expected to rise by a third to 197,000 between 2007 and 2009.

Spain, Ireland and the UK are set to see the sharpest rise within Europe.

Romeo Grill, chief economist at Euler Hermes, said: “The financial crisis will increase the risk of bankruptcy dramatically, particularly next year.

“There will be an explosion in the US, but also big rises in Europe and especially the UK.”

Euler added that every country, barring Japan, will suffer more insolvencies than in the previous downturn at the start of the century.

The figures come just a week after Euler issued a profit warning in the wake of the collapse of Woolworths (Channelweb, 2 December). The underwriter, which is the biggest insurer of credit in the UK channel, suggested its premiums may rise as corporate failures increase.